Laxmi Capital News
Direction to collect CGT rights, bonus shares on par value hits market

The sole equity market of Nepal cameunder pressure throughout the trading session on Sunday. The Nepal StockExchange (Nepse) index fell sharply on the first hour of trading and declinedfurther after it failed its attempt to pullback mid-day. Eventually, the indexlost 33.71 points, or 2.58 percent, to end the day at 1,273.95 points. 

Stock prices fell on the back of acircular issued by Internal Revenue Department (IRD) to Securities Board ofNepal (Sebon), Nepal Stock Exchange (Nepse) and CDS & Clearing Ltd (CDSC)amending the base rate provision in secondary market transactions. As per thecircular, profit made by selling bonus and right shares will be calculated withpar value of stocks as the base rate for transactions. As a result, higher capitalgains will be documented and investors will now be liable to pay more CapitalGains Tax (CGT). Total turnover increased to Rs 546 million as the marketwitnessed high selling pressure because of the circular. 

All major sectors followed the benchmarkindex's slump. Insurance sub-index lost the most and was down by 4.25 percent.Similarly, sub-indices of Microfinance and Hotels shed 3.13 percent each.Banking Sub-index also dropped 2.35 percent. Only Manufacturing &Processing Sub-index ended the day in green. 

RastriyaBeema Company Ltd (PromoterShares) was the most active stock on Sunday, logging Rs 37 million worth oftransactions. Other active stocks on the day include ordinary shares of NepalBank Ltd, RastriyaBeema Company Ltd, Premier Insurance Company Ltd and NepalLife Insurance Company Ltd.

Out of 155 scrips traded on Sunday,prices of only six went up. Shares of Uniliver Nepal Ltd was the top performingstock, gaining 4.04 percent on its price. Shares of Unnati Microfinance BittiyaSanstha Ltd, Lalitpur Finance Company and Pokhara Finance Ltd also gained over1 percent each. Sunday was the last trading day for shares of Lalitpur FinanceLtd prior to its book closure on June 4.

Conversely, shares of Mega Bank Ltdtumbled for fifth straight day, losing the highest 9.71 percent. Further, bothpromoter shares and ordinary shares of RastriyaBeema Company Ltd declined over8 percent each. Janaki Finance Ltd also saw its share price dip by more than 7percent.

ARKS technical analysis model indicates abearish Marubozu candlestick formation on daily timeframe as a result ofsustained sell-off witnessed during Sunday's trading. Hence, the index closedbelow the crucial support level of 1,300 points. The index also dropped belowthe 50-day moving average (MA) indicating another possible short-termdowntrend. An immediate support lies at the 1,370-point mark.

Relative Strength Index (RSI) is slopedtoward the oversold zone and Moving Average Convergence/Divergence (MACD) isslightly tilted down from the neutral line. Both indicate that the bearishmomentum is persisting in the market. Hence, no environment conducive to enterthe market can be seen in the current scenario.

Source: MyRepublica, 4thJune 2018

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